In recent years, there has been a strong trend towards a cashless society. To this end, large transaction card networks have been developed for purchasing goods and services. Along with widespread use of transaction cards there has also developed concurrent fraud losses. To combat these losses, a number of schemes have been implemented. The most common scheme is to print lists of cards which have been lost or stolen or whose holders have exceeded their assigned credit limits. When a card is presented during a transaction, the user's account number is compared with the circulated list to determine if the transaction should be authorized. This approach suffers from many drawbacks, none the least of which is the fact that the printed lists are always somewhat out of date.
In order to overcome these shortcomings, a sophisticated network of on-line transaction terminals have been placed in merchant locations for authorizing transactions. In this system, the card number and transaction amount are entered into the terminal. The terminal then transmits that information to the card issuer which determines if the transaction should be approved. The approval decision can be based on a number of factors. For example, the account number can be compared with a current list of lost or stolen cards. The transaction amount could also be compared to maximum transaction limit for that cardholder based on his credit worthiness or current deposits.
While the above described on-line system is inherently more reliable than the distributed card list, it also has drawbacks. For example, the network requires numerous communication links which give rise to significant carrier costs. In addition, where large distances are involved, the response time can be less than satisfactory from both a customer and merchant standpoint.
Various approaches have been implemented to reduce these problems. As described in U.S. Pat. No. 4,485,300, issued Nov. 27, 1984 to Peirce, approval parameters supplied by the card issuer can be distributed to local area processors such that communication costs can be reduced. Another enhancement technique is described in U.S. Ser. No. 730,309, filed May 2, 1985, and now U.S. Pat. No. 4,734,564 issued Mar. 29, 1988 wherein approval information is stored on the card itself. This approval information is read and acted upon by the transaction terminal located at the merchant. In this manner, certain approvals can be completed in an off-line manner, that is, where there is no connection to either the issuer or a central processor. The above cited patent and application are both assigned to the assignee of the subject invention and the disclosures therein are incorporated by reference.
One method of implementing the off-line approval system described in Ser. No. 730,309, cited above, is to encode the authorization data on a magnetic stripe formed on the card. More sophisticated off-line approval procedures can be performed where the transaction card is provided with an internal microprocessor and memory.
The first cards containing microprocessors, called smart cards, were developed approximately ten years ago and are used to a great extent in the European community. These cards typically include electrical contacts to provide an interface with a local transaction terminal. Information about the cardholder and associated transaction parameters can be stored and updated inside the card. By reading this information the terminal can carry out an off-line authorization procedure.
At the present time, smart cards are becoming very sophisticated, such that the authorization procedure can be carried out in the card itself. For example, the card can store a dollar amount which would represent the maximum amount of a transaction that could be authorized. During the transaction, the transaction amount could be entered into the smart card via the terminal. The microprocessor in the card can then compare transaction amount with the stored transaction limit to determine if the transaction should be approved. If the transaction is approved, an approval code would be generated and supplied to the customer and merchant.
The use of smart cards can further reduce communication costs, time delays and fraud losses. Unfortunately, this approach is not geared towards international travel where one cardholder will be dealing with varying currencies. As can be appreciated, the transaction limit is stored in the card in the form of a local or base currency, while purchases might be priced in a different, foreign currency. In this case, it would be impossible for the microprocessor in the card to make the comparison necessary for authorization. Accordingly, it would be desirable to provide an improved transaction card which could operate with foreign currencies.
In the prior art, a number of devices have been made which aid in currency conversion. For many years, mechanical, slide rule-type of devices have been designed to aid the traveler in converting currency. More recently, a number of microprocessor based devices have been developed for electronically converting an amount from one currency to another.
One example of a microprocessor driven currency converter is disclosed in German application Ser. No. 3410065, laid open Oct. 31, 1984. In this reference, it is suggested that a microprocessor driven, currency converter could be integrated in objects of frequent daily use, such as wrist watches. (See also German application Ser. Nos. 2923478, laid open Dec. 11, 1980, and 2905190, laid open Aug. 21, 1980.) The above disclosures evidence the need of a traveler to easily convert currencies to facilitate a cash purcahse. However, to date, this need has not been addressed for purchases made with a transaction card. More specifically, no transaction card has been developed with the ability to convert a stored transaction limit to a foreign currency and then perform an internal authorization procedure.
Accordingly, it is an object of the subject invention to provide a new and improved transaction card capable of authorizing a transaction in a foreign currency.
It is another object of the subject invention to provide a new and improved transaction card which includes a means for entering a conversion rate to permit the conversion of a stored transaction limit to a foreign currency.
It is still another object of the subject invention to provide a new and improved transaction card which can be readily used in foreign countries.
It is still a further object of the subject invention to provide a new and improved transaction card which can generate an approval of a transaction in a foreign currency without connection to a central processor.